Leveraged Returns

Posted by Ted Mannon on Tuesday, April 19th, 2016 Category1

When investors borrow money to purchase investment real estate, one feature they look for is “positive leverage.” Positive leverage refers to when the return on the investment is higher than the cost of the loan, and it can be a tool to check for a potentially worthwhile investment. Banks also test a property’s return relative […]

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Cap Rate

What is Cap Rate?

Posted by Ted Mannon on Tuesday, April 19th, 2016 Category1

DEFINITION A cap rate is calculated as a mathematical relationship between net operating income and the property sale price.   CAP RATE EXAMPLE Let’s take an example of how a cap rate is commonly used. Suppose we are researching the recent sale of a multi-family building with a Net Operating Income (NOI) of $125,000 and […]

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Breakeven Occupancy Ratio

Posted by Ted Mannon on Thursday, August 13th, 2015 Category1

The breakeven occupancy ratio is simply the sum of all operating expenses and debt service, divided by total potential rental income. This tells you what percentage of the property must be leased in order to cover all expenses and debt service obligations.

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HOW TO CALCULATE RevPar

Posted by Ted Mannon on Monday, August 3rd, 2015 Category1

RevPar = ADR x occupancy Revenue Per Available Room is a hotel industry financial metric calculated by multiplying the Average Daily Rate by the percentage occupancy. RevPAR can also be calculated by dividing the total room revenue in a given period (excluding discounts, sales tax and meals) by the number of available rooms in the […]

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HOW TO CALCULATE ADR

Posted by Ted Mannon on Monday, August 3rd, 2015 Category1

A metric widely used in the hospitality industry to indicate the average realized room rental per day.   Average Daily Rate is one of the core indicators – along with other metrics such as occupancy rate and revenue per available room – used to measure the operating performance of a lodging unit such as a […]

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Absorption Multi-Family

Posted by Ted Mannon on Monday, June 9th, 2014 Category1

Multifamily starts and completions are expected to continue their upward trend.   The number of starts will continue to rise through 2015 and perhaps 2016. We expect completions to surpass the long-run annual average in 2015 and remain above the average for several years to come.  Supply could begin to outpace demand this year. However, […]

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Natural Breakpoint

Posted by Ted Mannon on Thursday, May 29th, 2014 Category1

The Natural Breakpoint is the amount of gross sales that, when multiplied by the applicable percentage, equals the amount of annual fixed rent (natural breakpoint x _% = annual fixed rent). Stated another way, it is determined by dividing annual fixed rent by the applicable percentage (natural breakpoint = annual fixed rent ÷ %). For […]

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2015 Market Trends

Posted by Ted Mannon on Thursday, May 29th, 2014 Category1

Increased allocations and capital flows. With most institutions—not to mention high-net-worth investors—still being underallocated to real estate, combined with the strong four- and five-year performance of both NCREIF and NAREIT, we can expect more investment capital coming into commercial real estate. The significant amount of capital would be vexing if not for the fact that […]

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CREOP commercial real estate online publisher

Posted by Ted Mannon on Thursday, May 29th, 2014 Category1

When it comes to a online application which generates offering memorandums, proposals and flyers, nothing compares to CREOP with respect to design and ease of use. They user friendly application crunches all the numbers and creates elegant graphs, charts and tables which looks like it took weeks to create. When commercial real estate brokers go […]

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